Correlation Between Balanced Strategy and Simt Large

Can any of the company-specific risk be diversified away by investing in both Balanced Strategy and Simt Large at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Balanced Strategy and Simt Large into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Balanced Strategy Fund and Simt Large Cap, you can compare the effects of market volatilities on Balanced Strategy and Simt Large and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Balanced Strategy with a short position of Simt Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Strategy and Simt Large.

Diversification Opportunities for Balanced Strategy and Simt Large

0.65

Correlation Coefficient

Balanced Strategy  Simt Large

Poor diversification

The 3 months correlation between Balanced and Simt is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Strategy Fund and Simt Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Large Cap and Balanced Strategy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Balanced Strategy Fund are associated (or correlated) with Simt Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Large Cap has no effect on the direction of Balanced Strategy i.e., Balanced Strategy and Simt Large go up and down completely randomly.

Pair Corralation between Balanced Strategy and Simt Large

Assuming the 90 days horizon Balanced Strategy is expected to generate 1.46 times less return on investment than Simt Large. But when comparing it to its historical volatility, Balanced Strategy Fund is 1.52 times less risky than Simt Large. It trades about 0.26 of its potential returns per unit of risk. Simt Large Cap is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,467  in Simt Large Cap on May 28, 2025 and sell it today you would earn a total of  143.00  from holding Simt Large Cap or generate 9.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Balanced Strategy Fund  vs.  Simt Large Cap

Balanced Strategy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Balanced Strategy Fund are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Balanced Strategy may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Simt Large Cap

Risk-Adjusted Performance

Solid

Over the last 90 days Simt Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak fundamental indicators, Simt Large may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Balanced Strategy and Simt Large

The main advantage of trading using opposite Balanced Strategy and Simt Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Strategy position performs unexpectedly, Simt Large can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Simt Large will offset losses from the drop in Simt Large's long position.

The idea behind Balanced Strategy Fund and Simt Large Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.